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Well, judging from the experience in Japan, if past history is any guide, U.S. home prices will sink for the next 18 years. Since there are differences between Japan and the United States, let's instead focus on the income side of the statement.

Are incomes likely to catch up to "unsustainably high mortgage debt"? I think not.

** We are losing manufacturing jobs

** We are outsourcing technical jobs

** We are gaining service jobs at Wal-Mart, Pizza Hut, and retail outlets

** Pension plans are going under (United Air and Northwest Airlines, to name two), and auto pension plans at Ford and GM are under attack

** 50% of the jobs gained in this recovery were related to housing expansion.

What happens to those incomes if housing so much as slows?

** Will pay raises at Wal-Mart catch up with mortgage debt? When?

** What about rising energy costs and peak oil? When will wages catch up to those costs?

** What about those on Adjustable Rate Mortgages, whose mortgage costs will start rising dramatically in 2006 and 2007 from low teaser rates?

** What about rising property taxes and increased medical expenses, or does S&P suggest that such items are not a concern?

Mish wonders what the economists at S&P are thinking when they say that rising wages will catch up to the absurd home prices in the bubble areas in any sort of likely "soft landing." We are three years into a recovery, and real wages in general are still declining. Demand for housing, as suggested by rising inventories, is now slackening at the same time. Demand for gasoline even seems to be declining recently.

What about real estate sales commissions if home sales even modestly decline? What about other sales commissions if retail spending slackens? Is Wyss aware that there is an 18-to-1 or 20-to-1 wage differential with China that is putting pressure on jobs, wages, and benefits? Under what logical scenario will overall wages finally start rising now, this far into a recovery? The only way I can see wages rising is if the bubble keeps inflating. And all that would do is postpone the problem and make it bigger in the long run.

http://www.moneyweek.com/article/1384/inve...ng-bubbles.html

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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